Bye-Bye, Dubai

Not long ago, Dubai emerged as a symbol of crazed civic ambition, a once-quiet desert burg suddenly superheated by cheap capital. That's over.

By
Lauren Greenfield

Deserts have a way of reclaiming whatever is built upon them. In the case of Dubai, on the Persian Gulf, the global financial implosion has sent that process into overdrive. After six years of frenzied expansion, during which the emirate's population grew at 7% annually and nearly $600 billion went into construction (the world's tallest building! the world's largest shopping mall! the biggest man-made island! an indoor ski resort!), reality has come rushing into view.

"They have no oil, no culture, no history," says Peter Harradine, a prominent landscape architect in Dubai and manager of Harradine Golf. "So what they have been able to produce is a miracle." Or was it a mirage? Today, an estimated 50% of the slated developments are frozen or canceled. Banks have stopped lending. Housing prices fell 41% in the first quarter of 2009 and are expected to drop to preboom levels. The stock market has plunged 70% from its peak. And people across the socioeconomic spectrum are being laid off — and fleeing — in droves. But even fleeing is harder than it sounds: When foreigners, who once made up perhaps 80% of Dubai's 1.7 million residents, lose their jobs, their work visas are rescinded and they generally have 30 days to pay their debts and leave. Those who fail to pay risk debtor's prison. And debt here is now as deep and ubiquitous as the sand itself.

The wealthy, like the Emiratis, remain well cared for. Designer Roberto Cavalli, asked why he spent $30 million on his new Cavalli Club during a financial crisis, replied, "What financial crisis?" These pages may remind him.

Road to Nowhere

Dubai's expansion was as ambitious as it was improbable. Dubailand, a $64 billion mixed-use development initially planned at 107 square miles, was to be the world's largest collection of theme parks, shops, residences, and hotels. For now, though, its roller coasters, life-size dinosaurs, snowy mountainscape, and polar bears will remain a fantasy, one of the gaudier casualties of the economic downturn. While formal cancellations are rare in Dubai, a number of other projects have been delayed or scuttled, including an underwater hotel; a Tiger Woods golf course; a residential community set among full-scale replicas of the Seven Wonders of the World; a rotating skyscraper; and a beach designed by Versace, complete with chilled sand.

Last Gasp

With requisite hookah and a jeroboam of Champagne, a group of German businessmen celebrate their purchase of an Alaskan oil field at Plastik Beach Club, a playground touting itself as "exclusively for the filthy rich and aesthetically perfect." Public intoxication and displays of affection are jailable offenses in Dubai, but private clubs are quietly ignored by the authorities, often rendering them happy havens of vice. Plastik offers a helipad and a dock for its wealthy guests, many of them Russian; as the economy crumbles, they party on. One American expat says that while Dubai's promise has faded in the economic downturn, "people who dream of a better life dream of coming to Dubai. You can call it the American dream."

Frozen Desert

Dubai was a modest trading settlement until the 1980s. Fueled by cheap credit, tax-free living, and limitless ambition, the city-state pushed into the desert and up to the sky, culminating in the frenetic growth of the past six years. Now, with cash scarce and many of Dubai's expats moving away, the cranes (a quarter of the world's supply) have quieted and the streets are all but empty. A resident from Ireland reflects that living in Dubai during the rush was "like being on a drug. Every six months, the city would morph into something completely new." Kayla, a South African, recalls, "Everyone was talking about how it couldn't go on like this. Then, all of a sudden, everything changed."

Ghost Workers

Once Dubai's most valuable import, foreign laborers have become a liability to their former employers. Hundreds of thousands of them, mostly from South Asia, were drawn by the promise of plentiful work and money to send home to their families. Now that much of Dubai's construction has ground to a halt, many are being sent home; the number of migrant workers here has reportedly fallen by a third. Of those who remain, many are locked in labor disputes: They can't work, but can't leave. These jobless Bangladeshi men can't return home because, as frequently happens, their employers confiscated their visas, effectively leaving them shackled. Living four to a room in a labor camp, they haven't been paid in seven months. They say they live as "ghosts" in a "prison," unacknowledged and unknown.

The World: Flat

The skyline of Dubai, including the Burj Dubai, the tallest building on earth, photographed from the World Islands. Construction of the much-hyped project, an archipelago of 300 man-made islands designed to resemble a world map, helped extend Dubai's 45 miles of natural coastline to 467 miles, enough for everyone to have waterfront property — or so the brochures promised. The site used more than 34 million tons of rock and 320 million cubic meters of sand (making Dubai, oddly, a sand importer). State-owned megadeveloper Nakheel promotes the islands as "a blank canvas for orchestrating your own version of paradise, and where you'll discover that the World really can revolve around you." To some, however, the project represents Dubai's fundamental flaws: overbuilding and poor planning. Despite prices ranging from $20 million to $50 million, the islands are without power or sewer systems. And while 70% of them have already been sold, development has begun on only one.

Debt Refugees

White-collar workers and foreign laborers alike subsist at the pleasure of the Emiratis — necessary one day, expendable the next. Hendrick and Kayla, from South Africa, had been living in Dubai for six years. At the time this photo was taken, Kayla had recently been laid off and Hendrick hadn't been paid in months. After exhausting their savings to pay the mortgage on an apartment that had lost 40% of its value, they were left with no choice but to go home. "No one ever said, 'Do you know that if you lose your job, or can't pay your mortgage, you'll have to go to jail?' " Kayla says. "We had to flee the country with our tails between our legs, as if we'd done something terribly wrong."

A Sinking Feeling

A sick palm outside an empty villa on the Palm Jumeirah, a man-made island shaped like a 3-mile-long palm tree. Villa price tags have fallen to $2 million from $5 million, and many sit vacant. Real estate agent James Fox explains that in the overheated market, investors looking to flip properties often purchased houses before they were built; when the unregulated real estate market crashed, some were left with nothing but plots of sand. As anger grew, rumors spread that the island was sinking under the stress of traffic and overbuilding. Fox sees the real estate collapse as "a necessary correction of the market."

Rapid Return

As expats take flight, indebted and disillusioned, they leave behind relics of their former lives: new cars, left to accumulate dust and the comments of passersby. The government will not release numbers, but it's estimated that more than 3,000 abandoned cars have been found in 2009, many with keys in the ignition, an apology note on the windshield, or maxed-out credit cards in the glove compartment. Dubai once seemed like a sure thing. But as one departing expat notes, "At the end of the day, it's not our country. So if we're made redundant, we have to go home."

Honey-Wagon Train

When Dubai upgraded its waste-disposal infrastructure some years ago, it failed to anticipate the population explosion. Today, large swathes of the city have no sewage connections, so it is collected by hundreds of trucks and ferried into the desert to Dubai's only sewage repository, 35 miles outside city limits. During the boom, the trip took as long as 17 hours (depopulation has since cut that time), and it became routine for drivers to short-circuit the process by dumping into drainpipes along the way, sending the waste flowing back to Dubai to reappear on its upscale beaches.

THE VIEW NORTH, NEAR BURJ DUBAI | Photograph by Lauren Greenfield

A version of this article appeared in the September 2009 issue of Fast Company magazine.

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26Comments

FUNNY!!!!! This article from september 2009! Come and see Dubai now, look at the same area, it is amazing! It is completely changed and people are living in those places in a building which are not even in this photos! Amazing!!! Who ever says what Dubai is on top of the WORLD they have vision and no matter waht MEDIA or Americans say it will be always on top!

I think that there will always be cities such as Vegas and Dubai that cater to a specific type of traveler. Neither city is down for the count but are certainly worse off than others because of the extremely one-dimensional revenue source (whereas older, more established cities count on funds from other revenue streams). What I question is some of the decisions that the developers make. If Vegas has entirely too many hotel rooms, don't build another hotel. And why build the worlds largest indoor ski resort in a desert?____________TheLotBank - Lots for Sale

I met a traveller from an antique landWho said: "Two vast and trunkless legs of stoneStand in the desert. Near them on the sand,Half sunk, a shattered visage lies, whose frownAnd wrinkled lip and sneer of cold commandTell that its sculptor well those passions readWhich yet survive, stamped on these lifeless things,The hand that mocked them and the heart that fed.And on the pedestal these words appear:`My name is Ozymandias, King of Kings:Look on my works, ye mighty, and despair!'Nothing beside remains. Round the decayOf that colossal wreck, boundless and bare,The lone and level sands stretch far away".

To those calling the article racist because the author quoted Peter Harradine saying that Dubai has "...no oil, no culture, no history", exactly which race is that racist against? Because according to wikipedia (whose data is sourced), in 2005, Arabs only made up 26.1% of the population, and only 17% of them were Emirati. By comparison, Indians made up 42.3% of the population. With numbers like those, it's hard to conceive of how the pre-boom history and culture of Dubai could have any relevance to the post-boom history.

It's like trying to argue that Las Vegas has a history and culture that goes back to 1905 (when it became a railroad town). Yeah, maybe there's a few residents of Vegas whose family histories go back that far, but I guarantee you they are far overshadowed by the synthetic city that Vegas has become today.

I see this article for what it is, simply an update on the region – and it’s probably not far from the truth. However, as an American that visited Dubai for work 6 times during the boom — Dubai is in no way out of the game for good. Any city that I’ll remember the rest of my life, for its great people, fantastic food and unique culture is a city I’ll return too.

I’d actually draw a comparison between Dubai the city and the early days of the Internet industry in the U.S. There was a lot of investment, a lot of risk, and crazy expansion in an unproven technology – which, as we all know, came crashing down in 1999. Hundreds of corporations failed, thousands of people lost their jobs and individuals who made greedy or poor choices paid the price. But like the Internet industry, Dubai did something critical to it’s survival, and (fingers-crossed) eventual prosperity — they created an infrastructure. Roads, airports, residential, and commercial space, attractions and entertainment venues, trade zones, and some of the best city planning I’ve ever seen. They upgraded the communications, electric, water, and way-of-live for thousands of people and inspired others with things that had never been done before.

Dubai definitely has some hard times ahead, but that initial investment now, will pay off big time in the future. The world economy will turn, people will return with more real expectations and Dubai will dust itself off and grow at a more normal pace with all the right things in place.

Articles like this describe what it’s like today; it’s our fear of the unknown and shortsightedness that keep most of us away – but a few, a very smart few, recognize that now is the time to make an investment in Dubai’s future. 10 - 15 years from now people around the world will be saying, “I wish I would have bought a condo in the Dubai Marina in 2010.”

Great article! Dubai, Vegas & the Atlantis hotel in Bahamas share the same redeeming qualities: NONE!It was only a matter of time before this would happen, it was all built on ego and a sense of grandiosity that was quite sick!

Wow! I just can't believe what you allowed here to be published as an article. Actually I don't know if this can be called "an article", I would rather call it a tantrum of a demented Arab-hating fascist.

For starters, I'm not an Arab, I'm not here to defend them, I've never been to Dubai, I'm just discussing the way this article was written. And an article that begins with "They have no oil, no culture, no history" - which is fascistic blabbering that can be proven false by a short glance at any online encyclopedia or any other objective information source. Then the article continues further, but not in a professional objective tone, but more in a tone of someone who is unbelievably happy to see the downfall of Dubai, as if their biggest wish was fulfilled in that instant when Dubai started to collapse. And starting the article with "Deserts have a way of reclaiming whatever is built upon them" makes it all "somehow" justified to criticize Dubai, because author obviously thinks they committed a sin by building a town in a desert and it is normal that desert should now claim its territory back.

Comparing this to most of the articles on FastCompany site, this one is below all standards, and the same can be told for the IQ level of the author too. Next time you should try and wake up Hitler from the grave to write articles for you, rather than employing these small frustrated copies of him.

I can understand the negative comments, considering people who disagree with an article are more likely to voice their discontent.

Yesterday's announcement that DP World is asking for a 6-month extension on their U$ 50bn of debt shows that Dubai is quite a bit more affected than the rest of the world. Sure, London, New York, LA, have all problems, but their relevance in the world scene long predates Dubai, and their pull factors are tens of times bigger than Dubai's, which was, quite literally, built on sand...

Whoa - hang on there folks! I am a little surprised at the negative comments to this article. I live in Dubai and have lived here for a number of years and I don't know why so many here are so defensive about this article. Are you paid to write these comments?

Let's look at the facts - everyone knows there's about 3x as many new apartment buildings as needed. It's going to result in much lower prices and a very long adjustment period. Nobody in the construction industry is getting paid or has been paid in months. It's a complete mess. Oh, and did I mention that you can go to jail if you can't pay your debts or bounce a cheque? The author of this article was factually correct in everything he said.

Instead of writing these silly criticisms of this article, why don't you go try to sell your villa? I can tell you that it's got a long way to go (down) before it hits bottom. This is a cataclysm unlike the world has ever seen.

By the way - note to the author - the opening line about the desert reclaiming whatever is built upon them - brilliant! Very catchy - as is the title of the article. I suspect that accounts for all the delusional support from this part of the world. Go count all the empty villas people!

I have relatives living in Dubai.Your article is so far from reality .Yes the city is afected by the current situation the planet is in, but the city is one of the most vibrante and as for the foreigners that lose their jobs and they have 30 days to pay their debts and leave, to be honest it seems like a line from a second hand spagheti movie.

It was only a matter of time before this happened. The whole "debt prison" thing was very concerning to me. I shouldn't really be surprised though, there are countless cases where Dubai has arrested people who don't in any way deserve to be imprisoned. The laws are barbaric over there.

Great article. You have covered a lot of ground. Dubai was basically a bubble. Real estate was being driven up more through gifts to celebrities rather than on merit. You have not fully covered the scale of bad debts faced by bankers around the world. The strong objections raised to this article, shows the PR power of the powers that be. From, Vivek Shroff www.viveka.me

After reading all the comments posted by other readers it is obvious that your view of Dubai is one sided. Governemnt is super efficient here and they proactively work on every challenge. Even in this downturn this place is stable, all job losses is just an indication of market fluctuation. Any company would go for restructuring to steer the company through difficult times.

Dude, for the last six years; I've been living in the U.S, in one of the most wealthy areas of Beverly Hills, Newport Beach and Irvine... So many of my friends have lost their jobs, foreclosed on their homes, lost all their toys (fast expensive cars, boats...etc...) Some are in the Loan Mod stage and their credit is locked and cant even finance a 10K car!!! Things are really bad here in the States! Remember; the housing expansion and the poisonous sub-prime lending feast started here in the States and spread globally after the bubble burst!! Obviously, we live in a global economy and Dubai will be impacted...but it is not as bad as you make it out to be! So c'mon dude...that's not the end of Dubai as your gloom and doom headline emphatically suggests! BTW,if you've done the minimal historical research required by any respected journalist covering such an elaborate topic; you would have discovered that Dubai has been a thriving center for business and trade between Asia, the Middle East and Europe for decades! The oil boom has contributed immensely to its rapid ascension into a glorious modernity; but the will and the determination has always been there...desert sand or not! And that comment by Mr.Peter Harradine about Emiratis not having culture and no history is down right racist and speaks volumes of his ignorance and bigotry. Go Dubai!!!

After having lived in Dubai for a short period, I find this article to be quite a negative and one-sided one which appears to be a consequence of not knowing much about Dubai in the first place. Sure Dubai experienced a downturn like the rest of the world's economies, but that fact is that they are on track for a earlier recovery than many.

Regarding the "exodus" one must be very careful as during the months May - September many expats leave Dubai and head home for vacations as that is when their children are out of school, returning when classes begin again. This is a normal happening in Dubai which cannot and should not be misconstrued as an exodus.

I am rather disappointed at the FC for publishing this article. As some have already said, it is very easy to be negative. I would encourage the authors to spend some time in Dubai before writing anything else.